Stock exchanges to start setting 'circuit breakers'

WASHINGTON - Federal regulators on Thursday put in place new rules aimed at preventing a repeat of last month's harrowing "flash crash" in the stock market.

Members of the Securities and Exchange Commission approved the rules, which call for U.S. stock exchanges to briefly halt trading of some stocks that make big swings.

The exchanges will start putting the trading breaks into effect as early as Friday for six months. The New York Stock Exchange will begin Friday's trading session with five stocks: EOG Resources Inc., Genuine Parts Co., Harley-Davidson Inc., Ryder System Inc. and Zimmer Holdings Inc. The exchange will gradually add other stocks early next week, expecting to reach by Wednesday the full number that will be covered.

The "circuit breaker" plan was worked out by the SEC and the major exchanges following the May 6 market plunge that saw the Dow Jones industrials lose nearly 1,000 points in less than a half hour.

Under the new rules, trading of any Standard & Poor's 500 stock that rises or falls 10 percent or more in a five-minute period will be halted for five minutes. The "circuit breakers" would be applied if the price swing occurs between 9:45 a.m. and 3:35 p.m. Eastern time.

The idea is for the trading pause to draw attention to an affected stock, establish a reasonable market price and resume trading in an orderly fashion.

- AP